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How To Buy Homeowners Insurance

How To Save Money On Homeowners Insurance

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There are many ways to soften the bite that Homeowners insurance takes out of your budget.

Shop around for price -- but don't forget about service. A less expensive policy won't do you any good if the company won't pay a claim.

Once you've decided what coverage you need, compare prices and service of at least three different companies. If you don't have a broker to do this for you for free, you can compare costs online at sites such as offsite link and offsite link.  Alternatively,  to learn the names of insurance companies in your state which offer the type of coverage  you need, ask your friends or contact your state insurance department offsite link. (Phone numbers and Web sites offsite link are listed here offsite link.)

To learn about a particular company before making contact National Association of Insurance Commissioners ( offsite link) whichhas information to help choose an insurer in your state. States often make information available on typical rates charged by major insurers and many states provide the frequency of consumer complaints by company.

Do not let price alone be the determining factor. In addition to price, check:

  • The financial stability of the companies you are considering with rating companies such as A.M. Best ( offsite link) and Standard & Poor�s ( offsite link) and consult consumer magazines. When you've narrowed the field to three insurers, get price quotes.
  • The company's service history in the event of a claim. 
  • Complaints. The National Association of Insurance Commisioners collects complaint records from state insurance regulartors and publishes the information at:: https:/  Enter the name of the company, the state in which you live and the type of insurance. Particularly check the complaint ratio. The ratio shows the ratio of the company's market share in the United States compared to the company's market share of premiums for the particular type of policy. If the number is higher than the median for all companies, this is a red flag.
Talk to a number of insurers to get a feeling for the type of service they give. Ask them what they would do to lower your costs.

Raise deductibles. The higher the deductible, the lower your premium.

  • It's not advisable to file a claim for a small loss. Insurance companies may refuse to renew your coverage, or increase the premiums if you have more than one claim in a year, or several in three years. A higher deductible will keep you from being tempted to file a small claim.
  • The purpose of insurance is to cover against a loss you can't afford to sustain. Match your deductible to what you can afford and would be willing to pay out-of-pocket if a loss occurred. For many people, it's a good idea to have a deductible of at $500 or even $5,000.

Don't insure the land.

The amount of insurance you need should be based on your home and its contents, not the land on which it sits. If you had a fire that destroyed your house and belongings, you still wouldn't need money to repair the land itself. Land is uninsurable.

Compare prices when you renew your policy.

Every year -- or at least every two years - before you renew your policy, compare prices again. If you use a broker, ask him or her to do it for you. Also check to see if your needs have changed. For example, has inflation increased the value of your home beyond the amount for which it's insured -- even with an inflation rider?

Look for other discounts.

You may be qualify for a discount in the premium if:

  • You are a senior (to your dismay, you may find that companies define this as young as age 50)
  • You are retired

The theory behind these discounts is that you are likely to be home more and therefore likely to spot fires before they start.

Buy Auto and Home Insurance from the same company.

Many insurers offer "multi-line" discounts of 5 to 15% if you purchase more than one policy from them. Just be sure that the discount you receive brings the cost for both policies below that of the two policies purchased separately from different companies.

Check your CLUE report to correct any inaccuracies.

A "CLUE" report is the insurance industry record of your claims. You are entitled to a free one every twelve months. For information on how to get your free report, see offsite link
or call 866.312.8076.

Keep your house well maintained.

A well maintained house will be less likely to suffer damage, which means fewer or smaller losses. For example, fix minor leaks, trim dead branches.

Many insurers offer a discount to home owners who replace rubber hoses on their washing machines with stainless steel burst-proof hoses. Savings is generally many times the cost of the hose at a local hardware store.

Do what you can to improve your credit score.

Credit rating is often used as part of the calculation for a Homeowners insurance premium.

Find out whether you can get a discount for adding security devices. Compare the cost of adding the devices to the amount of the discount.

Anti-theft devices can provide a discount on your home insurance. Note that if you live in a low-crime area, the cost of installing and maintaining a security system may be greater than the reduction in premiums.

Find out whether you can get a discount for adding fire protective devices. Compare the cost of the devices (and added psychological comfort) to the amount of the discount.

Installing fire alarm devices, fire sprinkling systems, and fire-resistant shingles can help lower your rate.

You may qualify for a lower premium if you don't smoke, or if you stop smoking.

If you are going to renovate, find out if there are any changes to your plans that would lower your premium.

Your insurance broker or the insurance company can tell you if there are changes that would save you money. For example, installing storm shutters or shatterproof glass.

Look for group insurance.

You may be able to save money by getting group insurance through an employer, alumni association, or business association. Even with the group discount, don't assume that it's cheaper than an individual policy. Check! A high-priced policy with a 20% discount can be more than a lower-priced one with no discount.

Stick with one company rather than switch to save a few dollars.

After a few years, you can ask for loyal customer discounts. Some companies cut premiums by 5% if you've been with them for three to five years or 10% for six years or more. This doesn't mean that you shouldn't switch companies if you can find an even better deal.

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